1. Introduction
The detrimental effects of global environmental pollution and the threats stemming from extreme climate conditions have serious adverse impacts on both the economy and human health [
1,
2]. Following hypertension and smoking, air pollution is the third leading risk factor involved in global mortality [
3]. The “2023 Global Air Quality Report” released by the IQAir global air quality data platform pointed out that, among the 134 countries and regions studied, 124 did not meet the WHO PM
2.5 guideline standards, reaching as high as 92.5%. Air pollution not only alters the frequency of extreme climate events [
4] but also harms human health [
5,
6,
7] and affects economic development [
8], all of which are closely related to people’s production and livelihood. Therefore, identifying the influencing factors of air pollution and implementing effective control measures have become central concerns for both the academic community and the government. Numerous scholars, both domestically and internationally, have discerned economic activities [
9], population factors [
10], environmental regulations [
11], rail transportation [
12,
13], openness to international trade [
14], industrial structure [
15], financial development [
16], and urbanization [
17] as significant factors influencing air pollution. Of all these factors, environmental regulations are regarded with high expectations and have the potential to serve as an effective tool for controlling air pollution. As a result, various countries worldwide have implemented a range of environmental regulations, such as the White Certificate System in the European Union [
18], renewable energy policies in Latin American nations [
19], the carbon emissions trading system in China [
20], and the Energy-Consuming Rights Trading Policy (ECRTP) in China [
21]. Among them, the ECRTP is particularly noteworthy as a novel institutional innovation that fills the gap in the forefront governance of environmental regulation. Whether it can achieve environmental benefits while driving energy efficiency improvement is a question of concern for policymakers and researchers.
Currently, research on ECRTP can be classified into three main categories. The first category pertains to the design of institutional systems, with a focus on ECRTP’s regulatory objectives [
22], legal systems [
23], trading rules [
24], and implementation paths, as well as issues related to the connection with carbon emission trading systems [
25,
26]. The second category involves simulating the economic benefits of ECRTP as well as its potential for energy savings and emission reduction. For example, Liu et al. used non-parametric DEA to simulate energy policy combinations under three different scenarios and found that the combination of ECRTP and carbon emission trading policies can achieve optimal economic dividend effects [
27]. Li Yuan et al. developed a mathematical model where ECRTP coexists with the carbon market, and the results showed that these two policies are complementary in reducing energy consumption [
28]. Zhang et al. discovered, through constructing a non-parametric optimization model, that ECRTP can bring higher average economic potential and energy-saving potential at the industrial level in comparison to command control policies [
29]. The third category relates to evaluating the policy effects of ECRTP. Research in this area primarily focuses on the impact of ECRTP on economic benefits [
30], technological innovation or green innovation [
31,
32], total factor productivity [
33], industrial structure [
34], energy consumption intensity [
35], energy utilization efficiency [
36], energy consumption structure [
37], as well as the effects on carbon emissions [
30,
38].
While the existing literature predominantly focuses on the institutional design of the ECRTP, as well as its economic benefits, potential for energy conservation, emission reduction, and policy implications, research on the impact of the ECRTP on air pollution is still in its nascent stage. Wang et al. conducted a study utilizing data from 282 prefecture-level cities in China, covering the period from 2013 to 2019, employing a Difference-in-Differences (DID) model to investigate the effects of the ECRTP on pollution and carbon reduction. Their findings demonstrated that the ECRTP achieved dual environmental benefits by simultaneously reducing pollution and carbon emissions [
39]. In another study, Wang et al. analyzed panel data from 290 cities in China spanning the years 2010 to 2021, utilizing the Propensity Score Matching-Difference in Differences (PSM-DID) model to examine the impacts of the ECRTP. They found that pilot cities participating in the ECRTP experienced substantial improvements in pollution and carbon reduction levels compared to non-pilot cities [
40]. Similarly, Han et al. carried out regression analyses on panel data from 266 prefecture-level cities in China from 2011 to 2020, employing a DID model. Their research revealed that CO
2 and SO
2 emissions in pilot cities decreased by 84.8% and 34.5%, respectively [
41]. Additionally, Song et al. undertook an empirical analysis to assess the impact of the ECRTP on the environment, utilizing panel data from Chinese prefecture-level cities over the period of 2012–2019. They employed a multi-period PSM-DID approach in their study. The results demonstrated that the ECRTP effectively reduced both the total emissions and the emission intensity of soot pollutants, exhibiting a more pronounced inhibitory effect on the emission intensity [
42]. In contrast, Wang et al. investigated the impacts of the ECRTP on various pollutants, including nitrogen oxides (NO
x), sulfur dioxide (SO
2), carbon dioxide (CO
2), and smoke, and they concluded that the estimated coefficients were not statistically significant [
43].
Existing studies reveal several limitations. Firstly, although some of the literature has begun to explore the impact of ECRTP on air pollution, there remains a lack of consensus regarding the research findings. The effectiveness of ECRTP in suppressing air pollution lacks robust empirical support. Secondly, the existing literature predominantly focuses on ECRTP’s effects on pollutants, such as CO2, SO2, NOx, and smoke, while neglecting to assess the policy’s impact on air pollution through the lens of PM2.5, a crucial representative of air pollutants. Thirdly, current research is deficient in regard to providing a comprehensive analysis of the transmission mechanisms and the heterogeneity of effects related to ECRTP. Consequently, further research is warranted. This study applies the DID model, mediation effect model, and triple differences model to explore the influence of ECRTP on air pollution and its intrinsic mechanisms, leveraging panel data encompassing 277 prefecture-level cities in China during the period of 2011–2021.
Compared to the existing literature, this study offers innovations in the following four aspects. Firstly, this study delves into the theoretical aspects of ECRTP by analyzing its impact on air pollution from multiple perspectives and exploring the mechanisms of action involved. In contrast to previous studies, this paper provides a more comprehensive observational viewpoint in its theoretical analysis, thereby enriching the theoretical framework. Secondly, considering that the governance of PM2.5 has emerged as a global challenge, this study notably departs from existing research by employing PM2.5 as a proxy variable for air pollution in evaluating the policy effects of ECRTP. This approach effectively bridges a substantial gap in the current literature. Thirdly, the study identifies and examines the intrinsic mechanisms of ECRTP’s impact on air pollution through three pathways: energy efficiency, industrial structure upgrading, and technological innovation, providing new insights for addressing urban air pollution issues.
This article identifies and examines the intrinsic mechanisms of ECRTP’s impact on air pollution through three pathways: energy efficiency, industrial structure upgrading, and technological innovation, providing new insights for addressing urban air pollution issues.
Fourthly, to comprehensively evaluate the policy effects of ECRTP on air pollution, this study investigates the heterogeneous impacts of ECRTP on air pollution from various perspectives, including geographic location, resource endowment, energy-saving potential, and environmental protection types. This analysis offers more targeted support and decision-making grounds for air pollution governance in cities with diverse characteristics.
The structure of the remaining sections of this paper is organized as follows:
Section 2 entails theoretical analysis and research hypotheses.
Section 3 covers research design, including model construction, variable design, and data description.
Section 4 is dedicated to empirical analysis, encompassing variable descriptive statistics, parallel trend tests, baseline regression analysis, and robustness tests.
Section 5 focuses on mechanism testing, while
Section 6 explores heterogeneity analysis.
Section 7 provides a discussion, and
Section 8 presents the conclusions, policy implications, and limitations.
7. Discussion
The establishment of a compensated use and trading system for energy rights represents a significant initiative for China in advancing the reform of its ecological civilization system. This system is crucial for achieving the targets outlined in the “13th Five-Year Plan”, which aims to implement dual control over total energy consumption and energy intensity while also promoting green development. In this context, the National Development and Reform Commission of China issued a document entitled “Notice on the Pilot Implementation of Compensated Use and Trading of Energy Rights” in 2016. This document designated the Zhejiang, Henan, Fujian, and Sichuan provinces as pilot areas for ECRTP. The primary objective of this policy is to harness the market’s essential role in resource allocation, thereby motivating enterprises to pursue green innovations and energy conservation through market-driven mechanisms. This approach aims to achieve dual gains in environmental performance and economic performance.
Upon reviewing the research presented in this paper, it can be concluded that ECRTP significantly reduces PM
2.5 concentrations in the pilot areas. This finding demonstrates ECRTP’s effectiveness in mitigating air pollution and confirms its ability to adjust the energy structure through market mechanisms. Additionally, ECRTP improves energy efficiency, promotes energy conservation and emissions reduction, and facilitates the green transformation of China’s economy. Nonetheless, the research reveals that ECRTP has resulted in an average reduction of only 4.61% in air pollution levels in pilot cities compared to non-pilot cities, which is substantially lower than the conclusions drawn by Han et al., who reported that CO
2 and SO
2 could be reduced by 84.8% and 34.5%, respectively. This discrepancy may arise from the fact that ECRTP has not effectively suppressed PM
2.5 concentrations across all pilot cities, indicating that the policy impacts of ECRTP may possess a degree of uncertainty. However, the research indicates that ECRTP has led to an average reduction of only 4.61% in air pollution levels in pilot cities compared to non-pilot cities, which is significantly lower than the findings of Han et al., who concluded that CO
2 and SO
2 could be reduced by 84.8% and 34.5%, respectively. This discrepancy may be because the implementation of ECRTP has not comprehensively suppressed PM
2.5 concentrations in every pilot city, suggesting that the policy effects of ECRTP may carry a certain degree of uncertainty. The conclusions of this study align with actual observations, indicating that air quality in some regions has not significantly improved and may have even degraded following the implementation of ECRTP. Several factors may contribute to this situation [
64]: Firstly, ECRTP in China remains in the pilot phase, and the top-level design, regulatory framework, technological infrastructure, supportive policies, and trading systems require further enhancement. The current level of marketization is noticeably insufficient, which directly undermines the effectiveness of ECRTP implementation. Secondly, significant variations exist in quota allocation schemes among different pilot regions. For instance, Zhejiang Province focuses on controlling the newly added energy consumption while optimizing existing energy usage. This strategy has a relatively small impact on existing energy-consuming enterprises; however, it exhibits limited incentivizing capabilities, and its effectiveness in fostering market-oriented resource allocation is not evident. In contrast, the Henan and Fujian provinces adopt a quota trading method to control the total energy consumption by managing the annual total quota. At the same time, they implement classified management for various industries, existing production capacities, and newly established production capacities. In this context, enterprises in the pilot regions are frequently subject to dual regulation from both ECRTP and carbon emissions rights, leading to insufficient activity in the trading market. Thirdly, considerable disparities exist among cities regarding the intensity of policy implementation, the extent of support from local governments, and their levels of economic development. These variations may result in varied implementation outcomes of ECRTP.
8. Conclusions, Policy Implications, and Limitations
To evaluate the impact of ECRTP on air pollution, this paper takes the ECRTP pilot as a quasi-natural experiment and constructs a DID model. Empirical tests were conducted using panel data from 277 prefecture-level cities in China from 2011 to 2021. The conclusions are as follows:
Firstly, the baseline regression shows that ECRTP has a significant inhibitory effect on air pollution. This conclusion holds after a series of robustness tests. Secondly, the mechanism analysis indicates that ECRTP suppresses air pollution through pathways such as improving energy efficiency, promoting the upgrading of industrial structure, and stimulating technological innovation. Lastly, heterogeneity analysis shows that ECRTP has a stronger inhibitory effect on air pollution in areas that are economically and socially developed, possess greater energy-saving potential, are characterized as resource-dependent regions, and function as major areas for the prevention and control of air pollution.
The policy implications are as follows: Firstly, in leveraging ECRTP as an opportunity, it is essential to continuously summarize general rules and best practices to form replicable and generalizable experiences, practices, and systems. This includes expanding the pilot scope and promptly establishing a nationwide unified energy-consuming rights trading market system. Secondly, there is a need to broaden the scope of the pilot and establish more stringent targets for total energy consumption and intensity in the cities that are economically and socially developed, demonstrate greater energy-saving potential, are categorized as resource-based cities, and serve as key cities for the prevention and control of air pollution. Lastly, the government should not only focus on the direct inhibitory effect of ECRTP on air pollution but also consider comprehensively the formulation and implementation of relevant supporting policies to enhance energy efficiency, promote the upgrading of industrial structure, and stimulate technological innovation to maximize the energy-saving and emission reduction policy dividends of ECRTP.
There are limitations in this study that require further expansion and improvement in future research. Firstly, the research sample has certain limitations. This study only focuses on China’s ECRTP, while the feasibility and effectiveness of ECRTP implementation in other countries still need to be explored. Secondly, due to our being limited by the length of the paper, more detailed categorization studies were not conducted on the research samples in terms of heterogeneity analysis. Lastly, while this study discusses potential underlying mechanisms, there is still room for further analysis. Subsequent research could consider mechanisms such as energy structure and green total factor productivity.